How to Know if a Loan Is Recourse or Non-Recourse (2024)

A lot of financial jargon is involved when applying for a loan. To protect yourself, it is important to make sure you know what you’re getting yourself into. A major factor in what happens if you find you can’t repay a loan is whether your loan is recourse or non-recourse.

According to the Internal Revenue Service (IRS), recourse debt holds the borrower personally liable for the repayment of the debt. All other debt is considered non-recourse. That includes the pre-settlement legal funding that High Rise Financial offers. But how do you know if your loan is recourse or non-recourse? It is important to find out if you hope to protect yourself from potential financial implications.

Recourse Loans vs. Non-Recourse Loans

With recourse debt, if you default on the loan, the lender can seize whatever collateral you used to get the loan. In addition, if the value of the collateral does not fully repay the debt you owe, the lender can pursue legal action. That can include forcing you to sell other assets, garnishing your wages, and more. Many car loans are recourse loans.

In contrast, with a non-recourse loan, the lender can only take the collateral as payment if you default on the loan. They cannot pursue you for further payment.

If you have a non-recourse mortgage loan and default, the bank may repossess your house but will not pursue further legal action if the resale value of the home is less than the loan amount you still owe. Your obligations and what the lender can do if you do not repay the loan will be spelled out in the fine print. Be sure to read it carefully.

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Are Lawsuit Loans Regular Loans?

When you are having difficulty making ends meet while you wait for your settlement funds to come in, the thought of taking out another loan and putting yourself in further debt can seem foolish. However, lawsuit loans are unlike recourse loans. With a lawsuit loan, your creditworthiness is irrelevant.

With a traditional loan, financial institutions will have you fill out an application that reviews your credit report and score to determine whether they should issue you a loan and, if so, what your interest rates should be. A lower credit score translates to a higher interest rate on a traditional loan. Fortunately, lawsuit loans are also unlike traditional loans in that they do not have compound interest.

When to Apply for Pre-Settlement Funding

Even though you have a better understanding of how recourse loans and non-recourse lawsuit loans work, you may not be sure whether you are eligible for pre-settlement funding. There are many instances in which you might be eligible for legal funding.

In many cases, when someone is awaiting an insurance settlement or going through a civil litigation process, they may be able to qualify for a non-recourse loan. Some of the more common types of instances in which you might apply for pre-settlement funding include:

• Car accident lawsuits
• Motorcycle accident lawsuits
• Commercial truck accident lawsuits
• Work-related injury lawsuits
• Other motor vehicle accident lawsuits
• Construction accident lawsuits
• Medical malpractice lawsuits
• Birth injury lawsuits
• Qui tam lawsuits
• Whistleblower claims
• Labor and employment law violations
• Slip and fall accident claims
• Lawsuits surrounding defective or malfunctioning products

These are only a few of the more common situations that may warrant legal funding. If you are involved in another type of legal situation but are awaiting settlement funds, you could still secure a lawsuit loan through High Rise Financial. Contact our loan specialists to explore your options today.

How Much Is Your Civil Claim Worth?

To find out how much your pre-settlement funding could be worth, we will first need to examine how much you are expected to be awarded in your civil claim. In the vast majority of civil cases, victims have the right to be made whole. This means victims should be compensated for all of the losses they have endured relating to the incident and or subsequent injuries.

To ensure you get the most out of your claim, your attorney will likely quantify your damages based on economic and non-economic categories. Some of the more common types of economic and non-economic damages awarded in civil claims include:

• Diminished quality of life
• Cost of repairing or replacing your vehicle
• Other property damages
• Backpay
• Loss of income
• The increase in your insurance premiums
• emotional distress
• Lots of companionship and love
• Reputational damages
• Medical expenses, both now and in the future

Generally, you could expect to be approved for as much as 20% of your anticipated civil payout. However, the specific facts of your case will determine the amount of compensation we can authorize in the form of your non-recourse lawsuit loan. Contact our office today to find out how much you can expect to be sent to your bank in as few as 24 hours.

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Who Is Eligible for Legal Funding?

Qualifying for legal funding may be easier than you thought. There are no extra hoops to jump through, and you do not need to have excellent credit or a steady income in order to qualify. However, you do need to have a legal representative working on your case.

Your lawyer must also anticipate a settlement and approval of third-party funding. You can fill out our short application to find out whether your request can be approved. If you have additional questions about the application process or are unsure whether legal funding is a good fit for you, do not hesitate to contact high-rise financial.

Our loan specialists can guide you through the application process and help you understand the terms and conditions, how the repayment process works, and what to expect after your application has been approved.

Non-Recourse States

Whether your loan is recourse or non-recourse may depend on the state you live in. There are several states where lenders only issue non-recourse loans. They include:

• Alaska
• Arizona
• California
• Connecticut
• Idaho
• Minnesota
• North Carolina
• North Dakota
• Texas
• Utah
• Washington

Even if you do not live in a non-recourse state, you may qualify for a non-recourse loan. Lenders typically only give non-recourse loans to people with good credit and a low debt-to-income ratio.

Pre-Settlement Legal Funding Is Non-Recourse Debt with a Twist

Pre-settlement legal funding may be available to you if you have a pending personal injury lawsuit and you have a lawyer representing you. We understand that money may be tight if you were seriously injured in an accident or as the result of someone’s negligence. If you’ve been out of work, you may be looking for ways to pay your bills.

The good news is that High Rise Financial can help. We’ll ask you for some basic information, and once we have that, our underwriters will determine what sort of cash advance on your settlement we might be able to offer. In some cases, that amount can be up to $250,000.

We will ask you to supply:

• Your name, phone number, and email
• The state you live in
• Your attorney’s name and contact information
• The specifics of your claim/lawsuit
• Details about the extent of your injuries
• Your expected settlement amount

How Long Do I Have to Wait for Approval?

In most cases, you will know if you have been approved the same day. Once you and your attorney sign the paperwork, we can generally deposit the funds in your bank account within 24-48 hours.

While technically, the money you receive is a loan, the process does not work like a typical loan process. When you apply for pre-settlement legal funding with High Rise Financial, there is no need to:

• Undergo a credit check
• Reveal all your debt
• Provide proof of employment
• Provide previous tax returns

In addition, with our pre-settlement legal funding, you do not have to make monthly payments on your cash advance. High Rise Financial will be paid in full out of your eventual settlement.

What Happens if I Lose My Lawsuit?

In the event that you lose your case, you do not have to pay us. That’s right; we will not go after you for payment because this is a non-recourse loan – your settlement is the collateral.

This means your pre-settlement funding cannot be repaid through wages, income, or any other source other than your settlement funds. If your attorney does not win your case, our team at High Rise Financial will never attempt to seek recovery of this debt. You do not have to worry that we will attempt to garnish your wages, send your account to a debt collector, or otherwise take steps to recoup your losses.

After everything you have been through, if you lose your lawsuit, you may still be struggling to cope financially. The last thing you need to worry about is paying back the funds you need to continue supporting yourself and your family during some of the most difficult times in your life.

Applying for Pre-Settlement Legal Funding

Your personal injury lawsuit may not settle for months or even years. The other side may be trying to drag things out, hoping the financial strain will wear you down so that you accept a lowball offer. Stay strong, and don’t give in.

Apply now for pre-settlement legal funding from High Rise Financial. It’s a no-risk funding solution that can help you pay your bills and give you more time to focus on winning your case. Just fill out the form on our Apply Now page to get started.

What You Can Spend Your Lawsuit Loan On

Spending your pre-settlement funds can be highly anticipated after struggling financially. Once the money is sent to your bank, it is yours to spend as you wish. Some of the top expenses reported by other recipients of High Rise Financial non-recourse loans include:

• Rent
• Electric
• Mortgage payments
• Phone bills
• Internet expenses
• Credit card debt
• Entertainment costs
• Extracurricular activity expenses
• Car notes
• Auto insurance
• Health insurance
• Homeowners insurance
• Groceries and household expenses
• Other daily living expenses

Paying Back Your Pre-Settlement Funds

One of the top concerns reported by lawsuit loan applicants is how they will pay back their pre-settlement funds if their settlement does not come through. No matter how far along you are in the insurance or civil claims process, there is always a risk that your settlement could be delayed or dismissed entirely. If you have already received your legal funding and your settlement falls through, you do not need to worry.

You are only expected to pay back your non-recourse lawsuit loan if your attorney wins your case. If the settlement is for substantially less than you were previously expecting, this can also be easily handled without financial worry. Your attorney will be responsible for making sure to repay your lawsuit loan so you do not have additional financial expenses to worry about once your case has been resolved.

Get Help from Our Trusted Loan Specialists Today

High Rise Financial wants to help injury victims and those dealing with painful litigation cases access the funds they need to thrive, not survive. Get the financial help you need when you need it most.

Fill out our application today and secure your non-recourse loan in as few as 24 hours. Contact our office by phone or through our convenient contact form with questions or concerns.

Call or text (877) 735-0016 or fill out our form to apply today for free.